In the business world, political risks are the risks to investments created by government actions that could include events like elections, laws and regulations, economic mismanagement, special interest groups, and external political tensions. Economic risks are the macroeconomic circumstances that can lead to business losses. They include conditions like inflation and exchange rates, interest rates, minimum wages, taxes, and market prices.

Now put the two together to create a realistic picture of the global business world. Political risks and economic risks are in a constant state of interplay. For example, government-imposed tariffs impact the cost of materials.

In an....